Indian professionals in UK to save 25% on social security
What's the story
Union Minister Piyush Goyal has announced that Indian professionals working in the UK on temporary assignments of up to five years will no longer lose nearly 25% of their salary to the UK's social security system. The announcement comes as part of the Double Contribution Convention Agreement, which will come into effect on July 15, along with the India-UK Free Trade Agreement (FTA).
Financial impact
The money will belong to them: Piyush Goyal
Under the new agreement, 25% of the salary taken by the local government from Indians working in the services sector or other jobs for up to five years will now be deposited into their Provident Fund accounts in India. The minister said, "That money will belong to them; it earns 8.25% tax-free interest and serves as a support for their old age, ensuring social security for their families."
Trade benefits
India-UK FTA set to come into effect on July 15
The India-UK FTA, one of the biggest trade deals, will come into effect on July 15. Under this deal, any goods exported from India to the UK will be welcomed there at zero import duty. The Comprehensive Economic and Trade Agreement (CETA) also promises to cut tariffs on several Indian exports to zero while protecting India's dairy, cereals, oilseeds, and vegetable sectors.
Economic impact
India-UK FTA expected to boost GDP of both countries
The India-UK FTA is expected to significantly boost the gross domestic product (GDP) of both countries. The deal is likely to increase India's GDP by around £5.1 billion annually and the UK's GDP by about £4.8 billion. However, it should be noted that Indian exports worth some $775 million could be impacted by the UK's proposed carbon tax on products such as iron and steel, aluminum, fertilizer, and cement.